The D.C. panel said in 2-1 Halbig v. Burwell decision that the Internal Revenue Service could not offer individuals a tax subsidy on their health care coverage under Obamacare, as the health care law is popularly known, if they bought their coverage on a federal health exchange instead of a state-run program.

Shortly after that ruling, the Fourth Circuit appeals panel in Richmond, Virginia, unanimously held in King v. Burwell that the federal subsidy is allowable for all exchange purchasers, federal and state alike.

FYI, in both lawsuits, the Burwell who is being sued is Secretary of Health and Human Services Sylvia Matthews Burwell, who succeeded Kathleen Sebelius in that Obama Cabinet post. Sebelius was named as defendant when the suits were originally filed; when Burwell took over HHS, her name was substituted in the legal documents.

Now both decisions are being appealed.

Obama asks for full Obamacare ruling review: As expected, the Obama Administration has asked the full U.S. Court of Appeals in Washington, D.C., to reconsider the three-judge panel's divided ruling in Halbig.

The text, structure and purpose of the health care law make clear that tax credits are available to consumers "regardless of whether the exchange on which they purchased their health insurance coverage is a creature of the state or the federal bureaucracy," wrote government lawyers wrote in the filing for an en banc rehearing.

Many legal observers predict that a review by the full court, which includes more judges appointed by Democrats that Republicans, will overturn the 2-1 panel decision against the federal premium health care tax credit.

Obamacare opponents ask Supreme Court to step in: Meanwhile, the Competitive Enterprise Institute (CEI) has taken its case against the health care law and subsidy to the U.S. Supreme Court.

"From the time these cases were first filed, we've tried to get this issue resolved as quickly as possible for the plaintiffs and the millions of individuals like them," said CEI general counsel Sam Kazman in a statement. "A fast resolution is also vitally important to the states that chose not to set up exchanges, to the employers in those states who face either major compliance costs or huge penalties, and to employees who face possible layoffs or reductions in their work hours as a result of this illegal IRS rule. Our petition today to the Supreme Court represents the next step in that process."

Skeptics say the move is because the make-up of the Fourth Circuit, like that of the full D.C. appellate court, is more inclined to find for the White House in an en banc hearing. Why waste the time (and money) with a legal maneuver that's likely to go against you?

What's at stake? Many believe the Supreme Court will take up the King case. As Margot Sanger-Katz notes in the New York TimesThe Upshot column, the current disagreement between the D.C. and Fourth Circuit courts is a good example of the type of split that usually gets the Supreme Court's attention.

If that happens, then essentially the future of Obama's signature piece of legislation is on the legal line.

If the high court determines the tax subsidies can't be provided those who bought/buy on federal exchanges, that basically cripples the ACA mandate.

Most coverage is via a federally-supported insurance exchange because most states have opted not to offer the service to their residents.

And many folks can't afford insurance without the subsidy help. If they don't qualify for the tax credit, they likely will not get coverage, deciding that the potential tax penalty, at least in its early stage, is less costly.

There's also the issue of those who've already received the tax credits for federal exchange purchased policies? Will the justices say they must pay those amounts back?

The lawyers are going to have a field day.

IRS gets good ACA subsidy marks: While the politicians and courts wrangle over the IRS' involvement in Obamacare, the tax agency at least got some good news, noted last week at my other tax blog, about its ability to manage the health care tax break.

A Treasury Inspector General for Tax Administration (TIGTA) review found that back in October 2013 when the health care exchanges opened, the IRS was able to determine 99.97 percent of the time who was eligible for the ACA premium tax credit.

(Name is required. Email address will not be displayed with the comment.)

Name is required to post a comment

Please enter a valid email address

Invalid URL

Please enable JavaScript if you would like to comment on this blog.

Daily Tax Tip

8 costly tax breaks -- Congress is again wrangling over the federal budget. One way to save Uncle Sam some money is to eliminate costly, but popular, tax expenditures. These are losses to the U.S. Treasury from certain tax deductions, exemptions or credits to specific categories of taxpayers. Some benefit the wealthy; others offer tax help to others offer tax help to poorer filers. Regardless, these eight take a big bite out of Uncle Sam's bank balance. (March 30, 2015)

Did you miss a daily tip posted above? No worries. They're collected in the 2015 Daily Tax Tips pages, one for each month of the filing season: January, February, March and, coming soon, April. And stay tuned for Weekly Tax Tips, coming after we survive the April 15 filing deadline!

Sponsored Links

Counting Down to Tax Day

Tax filing day 2015 will be here before you know it, but our countdown clock to the 11:59 p.m. April 15 deadline will help make sure you don't miss it.

Time for Tax Tasks

March 1: It's March, the last full month of tax-filing season. Are you attacking your tax return like a lion? Or have the Internal Revenue Code's complexities turned you into a tax lamb?

Either way, you're at the right place. The following tax tips are for filers regardless of March animal avatars.

If so and you received $20 in tips in February, use Form 4070 to report them today to your employer. And don't forget to include the value of atypical tips.

March 16: Business filers generally beware the Ides of March because the 15th day of this month also is the corporate tax filing deadline, which can be dangerous to a company's bottom line. This year, however, the deadline day was on a Sunday, meaning that business taxpayers must file and pay any due tax by today.

March 17: It's St. Patrick's Day! But don't trust lucky charms to get you through a tax audit. Be prepared by, among other things, making sure you have sufficient documentation for all your tax claims and hiring a tax pro with audit defense experience to guide you through the process.

March 20: Spring has sprung! Not only is it time to finally welcome warmer weather, any spring cleaning also could pay off on your 2015 tax return. Get rid of all your unnecessary household items and clothes that no longer fit by donating them to your favorite nonprofit. You can claim the value as an itemized charitable deduction.

March 25: If you celebrated your 70½ birthday last year (and who doesn't have parties for half birthdays?) and didn't take money out of your tax-deferred retirement accounts by the end of 2014, you must make a specified withdrawal by April 1. No joke. These required minimum distributions, or RMDs, are Uncle Sam's way of finally getting his piece of your traditional IRA, workplace 401(k) or self-employed retirement plan pie.

March 31: You've put the finishing touches on your 1040 and are finally ready to file. Wait! Take one quick review of your forms to ensure you haven't overlooked any tax breaks or made any common tax mistakes. All's good? Then drop your return in the snail mail box or hit enter to e-file.

Advertisements

0, 1, 2, 3, 4, 5, 6, 7, 8, 9 ...

Taxes are all about the numbers. Check out these (mostly) weekly By the Numbers figures.

What are you looking for?

Looking for something in particular? Start with the Table of Contents. Or check out the Archives, where you can review posts by month and category. Or enter specific keywords in the box below to search Don't Mess With Taxes.

Keep Uncle Sam cranky!

It's no wonder Uncle Sam is not very happy here. His vault is empty. Don't Mess With Taxes aims to keep him cranky by providing tax and personal finance tips and advice that will put more money in your bank account, not the government treasury.

I gotta tell ya ...

AKA Disclaimer:

I am a professional journalist who has been covering tax issues since 1999. I am not a professional tax preparer. The content on Don't Mess With Taxes is my personal opinion based on my study and understanding of tax laws, policies and regulations. It’s provided for your private, noncommercial, educational and informational purposes only. It’s not a recommendation of any specific tax action(s) you should take. Similarly, mentions of products or services are not endorsements. In other words, my ramblings on the ol' blog are free advice and you know what they say about getting what you pay for. That's why when it comes to filing your taxes, I urge you to get additional, professional, paid-for guidance from an accountant, Enrolled Agent or other qualified tax professional who is familiar with your individual tax circumstances.

Note 1: Some of the links on this site are affiliate links. That means that if you click through from a Don't Mess With Taxes link and then buy the product, I receive a commission.

Note 2: Links to outside content might become inactive due to changes at the content's originating Web page. If you discover dead links, please e-mail me the details. Thanks.

DMWT Mobile

Don't Mess With Taxesis now optimized for readers on the go. You don't even need an app. Just type dontmesswithtaxes.typepad.com into your smartphone or other mobile device and it will load in a formatfor smaller browsers.